Chinese firms build business infrastructure for trade and investment

China’s Zhejiang Province was one of the earliest starting points of the ancient maritime silk road. Businesses in the province today are honoring that tradition. Not only are they active in engaging in overseas markets, some are now building business infrastructure needed for other Chinese firms to thrive in foreign markets.

Holley Group in Zhejiang Province is one of the biggest electrotechnical instrument makers in China. Founded in 1970, it was one of the first Chinese firms to expand overseas. Its main foreign market: Thailand. It had set up six subsidiaries in the country since 2000, and it established the Rayong Industrial zone in 2005.

“When we are investing overseas, we find that many Chinese companies are dealing with what we had been dealing with before. We want to share our experiences with them and make their expansions easier,” said Xiao Qijing, CEO, Holley Group.

The zone offers financial and legal consulting. Today 90 percent of Chinese firms in Thailand have set up camps in the zone.

“We have 86 Chinese companies in our zone and they have invested over 2.5 billion US dollars, which has created 20-thousand jobs for the locals,” Xiao said.

The company’s CEO said building this infrastructure could be a win for both China and Thailand.

“Chinese firms in the zone filled in some blanks for industries in Thailand. They didn’t have a steel tube industry or an optic cable industry before we came in,” he said.

Another firm in Zhejiang Province, tech giant Alibaba, is building quite a different kind of overseas infrastructure.

Alibaba’s founder Jack Ma famously said that he likes the phrase ‘small is beautiful’, the company owes its continued success to working with small and medium companies.

The Electronic World Trade Platform, or eWTP, is Alibaba’s latest ambition to service 10 million small companies. The way to do it is to build what the firm calls eHubs in foreign countries, where small local firms can build up their capacities for e-commerce. The first overseas eHub was set up in March in Malaysia.

“We want to use Alibaba’s advantage in logistics, e-commerce, big data as well as SME financing to help Malaysia transform into a digital economy,” said Song Juntao, EWTP Project leader, Alibaba Group.

The eHub offers one stop shop services from international logistics, customs to foreign exchange, which had been too expensive for small companies.

“Ultimately we want to build e-hubs in suitable places around the world, and link them together, making them work as one,” Song said.

Both two companies believe what they are doing embody the idea of China’s belt and road initiatives, which is building joint prosperity across borders.

As Chinese companies become more engaged in world trade, it has become more common for firms to have massive industrial projects overseas. Launching these projects are achievements on their own, but managing them sustainably is another story. In our next installment we will show you the challenges and experiences that Chinese companies meet in managing their overseas projects.